May 25, 2011
Can American Soccer Fans Bring Antitrust Claims Against European Football For Financial Fair Play? Part 2
Posted by David Zaring

Earlier, we asked whether fixing costs in a European sport that is broadcast in the United States might run afoul of American antitrust law.  Sports law expert Michael McCann, who has been covering the antitrust and other angles presented by the current NFL labor dispute for Sports Illustrated (he teaches at VLS too) is the guy to ballpark such a question, so we reached out to him.  Here's his quick take:

I agree with you that U.S. antitrust law could reach European football, for the reasons you noted.  In terms of the legality of salary caps, while we don't have a clear-cut holding stating that pro sports league salary caps violate Section 1 of the Sherman Act, the behavior of those leagues suggests that they believe that salary caps are vulnerable to antitrust rebuke.  After all, leagues have not unilaterally imposed their caps, instead they have obtained them through collective bargaining, thereby enjoying the corresponding labor exemption.  Even baseball's luxury tax system was obtained through collective bargaining.  I think a court reviewing a pro league's salary cap would be inclined to conclude that while the cap probably helps to promote competitive balance among teams -- the NFL's hard salary cap has certainly promoted competitive balance among NFL teams -- and financial sustainability among those teams, it is probably not the least restrictive means of obtaining those goals.  For instance, a luxury tax would be a less restrictive, albeit less effective, means of obtaining competitive balance, while revenue sharing would probably be a less restrictive means of obtaining financial sustainability.  Perhaps the cap as designed by European football might pass such scrutiny -- back in 1994, in the NBA v. Williams case, the SDNY said that the NBA's salary cap, which is a soft cap in that teams can spend more than the cap but pay a tax on their excess spending, would probably pass rule of reason.  Also, as you note, a U.S. court might find it important that European football cannot collectively bargain and obtain protection from the labor exemption because there is no players' unit with which to bargain.  Still, I find it telling that U.S. leagues seem wary of exposing their caps to antitrust law and in the unlikely event the European football's salary cap was exposed to the Sherman Act, it would probably be a source of concern.

It would be interesting to hear from experts on European law, and specifically European antitrust law, on whether the salary cap might violate antitrust provisions of the EC Treaty.  I believe Article 81 is the relevant provision and has been used to prevent restrictions on competition.  I don't know enough about EU law to opine, but that seems like another potential hurdle.

Interesting stuff.  Agreed that EU competition law would be the first thing to look at - but we American parochialists want to know whether the usual suspects should be drumming up a class action on these shores.  I suspect the fans would have a hard, but colorable, go of it.  But what about the American players abroad?  Clint Dempsey, the two Adus, Stuart Holden, all those goalies?  That seems quite a bit more promising, though none of them would be looking at pay cuts, probably.

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